Path: bloom-picayune.mit.edu!snorkelwacker.mit.edu!news.media.mit.edu!americast.com!americast.com!usa-post Newsgroups: usa-today.invest,americast.usa-today.invest From: usa-post@AmeriCast.Com Organization: American Cybercasting Approved: usa-post@AmeriCast.com Subject: invest Mon, Oct 12 1992 Date: Mon, 12 Oct 92 04:44:58 EDT Message-ID: 10-12 0000 DECISIONLINE: Personal Investing USA TODAY Update Oct. 12, 1992 Source: USA TODAY:Gannett National Information Network MARKETS ARE SAGGING: Stock and bond markets are sagging, and some analysts say investors should stay on the sidelines, at least until after the Nov. 3 presidential election. The Dow Jones industrial average plunged 39 points to 3137 Friday - its third big-drop Friday in a row. The Dow is now down 7% from its high of 3376, set Sept. 14. Bond prices also have tumbled, pushing yields sharply higher. (For more, see special Market package below.) MONEY MANAGER IS OPTIMISTIC: Friday's scary market slide doesn't scare money manager Peter Vlachos, head of New York's Austin Investment Management (assets: $125 million). "I'm sticking to my guns. The market is headed higher over the short term." Vlachos sees the Dow Jones industrial average, which closed Friday at 3137, topping 3400 by January. That's no matter who gets elected president. FIDELITY PULLS OUT OF MARKET: Apparently Fidelity Investments, the $180 billion money management giant, doesn't have much enthusiasm about the near-term market. Insiders say one of its top technical analysts is telling its money managers he thinks the market's headed south. Very recent stock sales by Fidelity are said to include General Motors, Ford and Cummins Engine. Ditto drug stocks such as Merck and Pfizer. TRITON BUCKS DOWNWARD TREND: Triton Energy bucked Friday's falling market, rising 1:4 point to $36 1:8 amid talk British Petroleum might soon make a positive announcement about its latest drilling activities in Columbia. Triton holds a 9.6% stake in a sizable Columbian property in which BP is the operator. Prior indications suggest the presence of significant oil reserves. PITNEY BOWES HURT BY RUMORS: Pitney Bowes, the No. 1 maker of postage meters and mailing equipment, is getting hit with some selling and short selling (a bet on a lower stock price). Reason: Rumors of production problem with its new Paragon mailing system. The firm admits it has had a problem, but says a faulty product from a supplier has been replaced and there will be no impact on revenue or shipments. ACCLAIM TO GET RECOMMENDATION: Software game maker Acclaim Entertainment is bucking the falling market. It's shares hit a 1992 high Friday of $13 and closed at 12 7:8, up 1:2. Stock insiders say that Alex. Brown will recommend the stock this week, which is sure to pump shares even higher. Acclaim's '92 low is $4 1:2. FED WON'T CUT INTEREST RATES: Federal Reserve Board Chairman Alan Greenspan says the central bank will not be swayed by election year politics in deciding whether to cut interest rates again. Greenspan held a rare press conference Saturday after addressing corporate executives at a Business Council meeting. Though Greenspan says the economy is sluggish, he didn't indicate whether the Fed plans a rate cut soon. CARDS HAVE GENEROUS YIELDS: Savings and loans at death's door could once be counted on to pay top yields on certificates of deposit. Now, banks that primarily issue credit cards pay some of the top yields. Unlike savings & loans that died paying top yields in the late '80s, credit-card banks aren't luring cash to stay afloat. They're paying high yields because they're hungry for money to lend to customers. PROJECTIONS GET MORE GLOOMY: Many top economic forecasters are scaling back already weak projections for economic growth next year, a survey has found. The consensus of 52 economists, surveyed by the newsletter Blue Chip Economic Indicators this month, is that the economy will grow just 2.7% in 1993. The forecast has fallen by 0.1% each month since June, when it called for 3.1% growth. INCUMBENT LOSS DROPS STOCKS: A study by management consultant Mitchell & Co. shows that stocks usually do worse in the first year of a new administration when the incumbent loses. The study tracked the performance of Standard & Poor's Composite index the six times an incumbent president lost since 1888. The average return shows a 7.2% loss. Key reason: Willingness to take hard-nosed action in a new term. RALLY HELPED INSURANCE INDUSTRY: A powerful rally in the bond market helped the USA's life-insurance industry boost its strength and safety last year, a new analysis of the industry's 1991 financial records shows. Only 45 insurers had risky assets greater than their total net worth at the end of 1991. And junk bond holdings dropped sharply as insurers took advantage of falling interest rates to dump those bonds. DOW JONES OPENS ON DOWNSWING: The Dow Jones average of 30 industrials opens at 3136.58 Monday after closing down 39.45 Friday. The New York Stock Exchange composite opens at 222.11, down 2.58. The American Stock Exchange market value opens at 364.85, down 2.16. The NASDAQ OTC composite opens at 570.52, down 3.36. SPECIAL PACKAGE ON MARKET: MARKETS SAGGED OVER FEARS: Stocks and bonds were hit last week as hopes that the Federal Reserve would cut short-term rates evaporated. That caused bond investors to sell. The impluse to sell spread to the stock market, where worries about slow economic growth also took a toll. The election now appears to be Wall Street's key issue. Bond investors think Bill Clinton will win and that it would be bad for bonds. CLINTON MAY ADD TO DEFICIT: Analysts say that Clinton, who has made fixing the economy a big priority, will likely push for programs that could boost economic growth but could add to the federal budget deficit. That would force the government to sell more bonds at higher interest rates and might prove inflationary, eroding the value of bonds. But analysts say many stocks would benefit from a Clinton election. INVESTORS HATE UNCERTAINTY: Still, stock investors hate the uncertainty of a presidential changeover. So many analysts don't expect a big rebound in either market until after the election dust settles. Some analysts do warn that stocks usually do worse the first year of a new administration - in both halves, in fact - when the incumbent loses. So, a Clinton win could slump the market. (End of package.) 24-HOUR TELEPHONE INFORMATION: USA TODAY Money Hot Line. 95 cents a minute. 1-900-555-5555. Personal Investing editor: Martin Baucom. (1-919-855-3491) Making copies of USA TODAY Update (Copyright, 1992) for further distribution purposes violates federal law. This article is copyright 1992 Gannett News Service. Redistribution to other sites is not permitted except by arrangement with American Cybercasting Corporation. For more information, send-email to usa@AmeriCast.COM